MasterCard’s half year results
It might seem odd to headline this post about Dynamic Currency Conversion (DCC) and then start talking about Mastercard’s half year results for 2011. However, reading the press release from their results showed some interesting figures:
- The operating margin was 54.3% an increase on the comparable period of 53%
- Increase in cross-border volumes of 19.3% (for the second quarter of 2011)
Aside from pushing up operating margins, those increasing cross-border volumes is an interesting statistic.
MasterCard’s quarterly purchase volume in the quarter was US$608 billion, so there are substantial sums being spent cross border. This represents the huge opportunity for DCC – both for suppliers like Fexco and their customers like Aer Lingus.
Making DCC win win
There has been some (fair) bad publicity about DCC where the merchant attempts to rip the customer off by charging a worse exchange rate that their bank would charge. However, if merchants are focussed on their customers then they can still make a margin by charging a fair fee and exchange rate. When this is less than their bank would charge, the customer wins out.
Even at rates less than banks might charge their credit card customers there is still a good margin for merchants and the DCC suppliers. Hopefully, a small number of rouge merchants ripping their customers off will not stop this potentially lucrative opportunity for airlines and other travel companies.
You can read more about MasterCard’s figures by clicking here